Bulletin
Investor Alert

London Markets Open in:

July 20, 2020, 4:21 p.m. EDT

A coronavirus vaccine may not be beneficial for your favorite stocks

Popular stocks have lost momentum and further upside gains may be capped

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    SPDR Dow Jones Industrial Average ETF Trust (DIA)
  • X
    Dow Jones Industrial Average (DJIA)
  • X
    Tesla Inc. (TSLA)

or Cancel Already have a watchlist? Log In

By Nigam Arora


Getty Images

We all want a safe and effective vaccine for the coronavirus. Certainly one or more effective vaccines will be good for the economy.

However, the stock market is detached from the economy. So here is the key question for investors: “How will the stock market react to the news of vaccines, not immediately but over a period of time?”

The Dow Jones Industrial Average ETF /zigman2/quotes/208954582/composite DIA -0.10% , which tracks the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.12% shows:

• It has reversed.

• It is still continuing to levitate.

• Tesla /zigman2/quotes/203558040/composite TSLA +4.03% stock, an indicator of speculative sentiment, has lost momentum. It reached a high of $1,794.99 but has since moved down to $1,550.30. This is a big move.

• Amazon /zigman2/quotes/210331248/composite AMZN +0.05% , the poster child of stocks benefiting from the coronavirus-led economic lockdown, has fallen from $3,344.29 to $2,991.12 as of this writing. This is a big move and shows loss of momentum, just like Tesla stock has.

• Netflix /zigman2/quotes/202353025/composite NFLX -1.48% stock, the beneficiary of people staying at home watching more video, has moved down since the reversal day from $575.37 to $490.89. Again, this is a big move showing loss of momentum.

• The same is true of fast-growth companies Zoom Video /zigman2/quotes/211319643/composite ZM +2.20% , Fastly /zigman2/quotes/212251938/composite FSLY +1.87% , Peloton /zigman2/quotes/208035743/composite PTON -1.63% and DocuSign /zigman2/quotes/205992027/composite DOCU -4.21% .

• Among popular tech stocks, Apple /zigman2/quotes/202934861/composite AAPL +2.77% and Microsoft /zigman2/quotes/207732364/composite MSFT +1.58% are also showing loss of momentum but to a lesser degree. Alphabet /zigman2/quotes/205453964/composite GOOG -0.09%   /zigman2/quotes/202490156/composite GOOGL +0.09% and Facebook /zigman2/quotes/205064656/composite FB +1.28% have been more resilient to momentum loss.

• Moderna /zigman2/quotes/205619834/composite MRNA +12.20% , AstraZeneca /zigman2/quotes/200304487/composite AZN +1.43% , Pfizer /zigman2/quotes/202877789/composite PFE +2.00% , BioNTech /zigman2/quotes/214419716/composite BNTX +2.00% , Novavax /zigman2/quotes/202614340/composite NVAX +3.53% and Inovio Pharmaceuticals /zigman2/quotes/202993817/composite INO +8.00% — all coronavirus vaccine stocks — have gained momentum.

What does it mean?

The conclusion to be drawn from investor behavior so far is that popular stocks are stretched to the upside. When there is good news about a vaccine, popular stocks may lose more momentum and fall over a period of time.

Don’t let the initial reaction fool you. Initially, money will flow into futures and ETFs, boosting stocks. Main Street stocks that have been hurt may benefit. These include Carnival /zigman2/quotes/202325446/composite CCL -4.95% , American Airlines /zigman2/quotes/209207041/composite AAL -2.47% and Cheesecake Factory /zigman2/quotes/207909209/composite CAKE +6.21% . As a note of caution, these stocks should be bought only on dips in buy zones, when signals are given or on other news in a properly diversified portfolio. Please read, “Here’s the secret sauce to handle the stock market’s election and virus fears.”

Disclosure: Arora Report portfolios have positions in Apple, Amazon, Alphabet, Microsoft and Facebook. Nigam Arora is the founder of The Arora Report, which publishes four newsletters. He can be reached at Nigam@TheAroraReport.com.

/zigman2/quotes/208954582/composite
US : U.S.: NYSE Arca
$ 309.65
-0.32 -0.10%
Volume: 4.55M
Jan. 25, 2021 8:00p
loading...
/zigman2/quotes/210598065/realtime
US : Dow Jones Global
30,960.00
-36.98 -0.12%
Volume: 477.35M
Jan. 25, 2021 5:15p
loading...
/zigman2/quotes/203558040/composite
US : U.S.: Nasdaq
$ 880.80
+34.16 +4.03%
Volume: 41.17M
Jan. 25, 2021 4:00p
P/E Ratio
1,760
Dividend Yield
N/A
Market Cap
$802.53 billion
Rev. per Employee
$511,871
loading...
/zigman2/quotes/210331248/composite
US : U.S.: Nasdaq
$ 3,294.00
+1.77 +0.05%
Volume: 3.75M
Jan. 25, 2021 4:00p
P/E Ratio
96.47
Dividend Yield
N/A
Market Cap
$1651.88 billion
Rev. per Employee
$351,531
loading...
/zigman2/quotes/202353025/composite
US : U.S.: Nasdaq
$ 556.78
-8.39 -1.48%
Volume: 7.21M
Jan. 25, 2021 4:00p
P/E Ratio
91.58
Dividend Yield
N/A
Market Cap
$249.69 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/211319643/composite
US : U.S.: Nasdaq
$ 391.83
+8.43 +2.20%
Volume: 5.18M
Jan. 25, 2021 4:00p
P/E Ratio
273.62
Dividend Yield
N/A
Market Cap
$111.91 billion
Rev. per Employee
$245,915
loading...
/zigman2/quotes/212251938/composite
US : U.S.: NYSE
$ 105.21
+1.93 +1.87%
Volume: 6.50M
Jan. 25, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$11.72 billion
Rev. per Employee
$318,194
loading...
/zigman2/quotes/208035743/composite
US : U.S.: Nasdaq
$ 157.14
-2.61 -1.63%
Volume: 6.61M
Jan. 25, 2021 4:00p
P/E Ratio
2,068
Dividend Yield
N/A
Market Cap
$46.73 billion
Rev. per Employee
$494,288
loading...
/zigman2/quotes/205992027/composite
US : U.S.: Nasdaq
$ 244.40
-10.75 -4.21%
Volume: 4.20M
Jan. 25, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$47.60 billion
Rev. per Employee
$249,161
loading...
/zigman2/quotes/202934861/composite
US : U.S.: Nasdaq
$ 142.92
+3.85 +2.77%
Volume: 157.61M
Jan. 25, 2021 4:00p
P/E Ratio
43.75
Dividend Yield
0.57%
Market Cap
$2339.61 billion
Rev. per Employee
$1.86M
loading...
/zigman2/quotes/207732364/composite
US : U.S.: Nasdaq
$ 229.53
+3.58 +1.58%
Volume: 33.15M
Jan. 25, 2021 4:00p
P/E Ratio
37.03
Dividend Yield
0.98%
Market Cap
$1708.29 billion
Rev. per Employee
$877,393
loading...
/zigman2/quotes/205453964/composite
US : U.S.: Nasdaq
$ 1,899.40
-1.65 -0.09%
Volume: 1.93M
Jan. 25, 2021 4:00p
P/E Ratio
37.93
Dividend Yield
N/A
Market Cap
$1282.98 billion
Rev. per Employee
$1.36M
loading...
/zigman2/quotes/202490156/composite
US : U.S.: Nasdaq
$ 1,894.28
+1.72 +0.09%
Volume: 2.53M
Jan. 25, 2021 4:15p
P/E Ratio
37.83
Dividend Yield
N/A
Market Cap
$1282.98 billion
Rev. per Employee
$1.36M
loading...
/zigman2/quotes/205064656/composite
US : U.S.: Nasdaq
$ 278.01
+3.51 +1.28%
Volume: 19.09M
Jan. 25, 2021 4:00p
P/E Ratio
31.66
Dividend Yield
N/A
Market Cap
$781.86 billion
Rev. per Employee
$1.57M
loading...
/zigman2/quotes/205619834/composite
US : U.S.: Nasdaq
$ 147.00
+15.98 +12.20%
Volume: 26.97M
Jan. 25, 2021 4:15p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$51.85 billion
Rev. per Employee
$72,541
loading...
/zigman2/quotes/200304487/composite
US : U.S.: Nasdaq
$ 54.01
+0.76 +1.43%
Volume: 13.74M
Jan. 25, 2021 4:00p
P/E Ratio
56.38
Dividend Yield
2.54%
Market Cap
$139.57 billion
Rev. per Employee
$346,812
loading...
/zigman2/quotes/202877789/composite
US : U.S.: NYSE
$ 37.28
+0.73 +2.00%
Volume: 31.73M
Jan. 25, 2021 4:02p
P/E Ratio
24.14
Dividend Yield
4.18%
Market Cap
$203.16 billion
Rev. per Employee
$586,070
loading...
/zigman2/quotes/214419716/composite
US : U.S.: Nasdaq
$ 110.61
+2.17 +2.00%
Volume: 2.88M
Jan. 25, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$26.11 billion
Rev. per Employee
$92,777
loading...
/zigman2/quotes/202614340/composite
US : U.S.: Nasdaq
$ 131.46
+4.48 +3.53%
Volume: 3.01M
Jan. 25, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$8.08 billion
Rev. per Employee
$113,103
loading...
/zigman2/quotes/202993817/composite
US : U.S.: Nasdaq
$ 9.72
+0.72 +8.00%
Volume: 19.38M
Jan. 25, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$1.84 billion
Rev. per Employee
$21,196
loading...
/zigman2/quotes/202325446/composite
US : U.S.: NYSE
$ 19.22
-1.00 -4.95%
Volume: 55.84M
Jan. 25, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
$18.90 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/209207041/composite
US : U.S.: Nasdaq
$ 15.43
-0.39 -2.47%
Volume: 61.95M
Jan. 25, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
$9.57 billion
Rev. per Employee
$342,319
loading...
/zigman2/quotes/207909209/composite
US : U.S.: Nasdaq
$ 44.99
+2.63 +6.21%
Volume: 1.80M
Jan. 25, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
$1.93 billion
Rev. per Employee
$53,680
loading...

Nigam Arora is an engineer, nuclear physicist, author, and entrepreneur and the founder of two Inc. 500 fastest growing companies. He is also the developer of the ZYX Change Method to profit from change by investing. The premise is that most money is made by predicting change before the crowd. Arora is the chief investment officer at The Arora Report and the editor of four newsletters that track the ZYX Change Method. Nigam can be reached at Nigam@TheAroraReport.com

This Story has 0 Comments
Be the first to comment
More News In
Investing

Story Conversation

Commenting FAQs »
Link to MarketWatch's Slice.